In a recent Celent webinar, senior analyst Mike Fitzgerald and independent consultant Mick Simonelli, who used to work for USAA, spoke about the importance of innovative growth within financial services. Their analysis indicated disconnect between company goals and innovation strategies throughout the sector, and between financial services and other industries.
A recent Celent study revealed an industry-wide effort to improve focus on innovation. Participants consisted of executives, senior management and mid-level employees from insurers, banks, credit unions, and other financial services companies. Seventy-nine percent of respondents claimed that innovation is a key focus for 2014, but Fitzgerald and Simonelli believe that major issues have to be resolved before true progress can be made.
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A primary issue is establishing what innovation means, which can vary by company. “If you think you are being innovative, you need to put some tight definitions around it,” said Fitzgerald. If employees have conflicting perspectives on innovation it can cause disconnect and confusion within the company. In order to establish a singular meaning, businesses need to consider their culture, workforce and areas of expertise. All employees must agree on what innovation is before they can focus on their programs.
In defining innovation, Simonelli noted that financial services companies should strive to keep up with other industries. He – along with 51% of survey respondents – believes it is behind. Banks that think they are innovative because they have functioning mobile apps are not truly innovative, he said; nor are insurers who are content with merely having functional websites. “I am not happy with that,” he said. “It’s troubling to me that so many leaders are satisfied.”
Once it is defined, innovation must become a corporate priority. 65.5% of respondents claimed innovation is important to strategy; 28.2% said it was critical. Given these statistics, Simonelli believes that we won’t see positive results in the near future. The focus on innovation must increase. He cites Apple and Google as examples of companies where employees are given time to focus on innovative projects. These practices should become the norm, not the exception.
“If innovation is not critical then it competes with a lot of other priorities,” he said. “If it has to compete, innovation is always going to lose.”